Dec 14 2008
Saving for a Rainy Day
I used to tell dad that I don’t believe in saving for a rainy day — the rainy day might not come — then what do you do with all those savings?
So all my life, I didn’t save. I wouldn’t save. That word “save” was just not in my vocabulary.
Financial planners who try to convince me to invest in this and that would leave frustrated because I would stubbornly say ‘no.’
My personal monetary policy is simple – if I have it I spend, when I don’t then I wont.
Then the on-going global financial meltdown and a recent Mastercard survey got me thinking…
The survey reveals atleast 87% of respondents from all income brackets would save during these hard times. For precautionary or other reasons.
As far as I can see, I have no reason to save. My job seems stable. And I don’t have any other financial obligations.
But the survey got me worried, if high-income earners are saving for the rainy day, shouldn’t I be saving too?
9 Responses to “Saving for a Rainy Day”
Hi tim,
Surprised to hear that. Yup, u should start saving if u have not been doing so for very simple reasons:
a. we never know we will lose our job (just as nobody think Lehman Bro will ever collapse);
b. it gives us financial freedom especially one may want to take a couple of years’ break from work for personal reasons;
c. some unforseeable event or maybe health reasons (especially more sickness when one gets older) that dun allow us to continue working;
d. ensure sufficient money to maintain our preferred lifestyle after our retirement (CPF is insufficient to see us thru)
Unless a person inherited a large sum of money or still could rely on their parents for money, most people would need to save for a rainy day or even beyond that; planning for retirement fund the moment they started working. Having said that, it is never too late to start saving now even though the amount may be small. Maybe a piggy bank will be a good Christmas present for u………
Cheers and happy saving,
SG
Hiya Tim
Been kinda of rainy these few days…you should start saving. You wont know when it will start to storm.
You might be getting quite a few piggy banks soon.
Happy hols.
dan
hi tim,
I agree i agree with you totally, in economics, these people are acting upon expectations (adaptive or rational) and sees the need to save to spend for the next period when income falls so as to maintain equitable consumption levels across different periods.
however this is precisely the crux of the problem as, people tend to over react till the point of being irrational, with drastic cuts in spending habits all based on “fears” when things are still “ok”
in essence, we see 2 effects one being the real credit crunch when the global economy is not producing as much as before and income level drops , second and more importantly the cycle is then perpectuated when people takes further preemptive steps by further tightening and cutting spending. this cause demand to drop further and supply to follow like wise and the cycle continues.
essentially, we should maintain a comfy level of lifestyle according to our level of income and spend as we used to and take things one step at a time. we really do not need to factor in a global catastrophy into our own wallets and drown ourselves:)
Everyone has his rainy day. It’s just that some people can’t foresee it. You may make yourself save in the form of insurance if you really can’t do it. Save it for your future family, your parents, your siblings… and there are so many reasons.
You can’t be sure if you fall sick someday or even encounter accident, and the saving would come in handy.
This goes for everybody.
Its ok to save for a rainy day… but one must not forget to spend – to live a life.
The occasional pampering is fine – just treat it as a form of reward – to celebrate your present success.
Saving is a must actually. I didn’t save too at the start but now I know how important MONEY would be when the rainy days come. Most of the time we really need money and when you really, really need it, there’s nowhere you can get it, but from your own pocket. So we should better start saving for the rainy day. I agree to your post! That’s nice…
Hi Tim,
I’m quite surprised to hear that too. Actually, i have the same principles of life as you do. – if i have it i spend, if i don’t then i won’t.
But recently with all the financial crisis ongoing things make me wonder that i have to start having this habit of saving. so i make it a habit of saving start from 2009. I hope i will keep it up. It does requires a lot of determination though.
Since you dont have time to exercise,its better you lay off those bacons during bfast,bec they are the champions of fats.
take care
Robin
You should start saving unless you plan on not getting married. Kid’s education is expensive and you can count on college tuition increasing in the next 10-20 years.